Chrysler execs get millions to stay put

Automaker defends payouts amid looming bailout talks

As Detroit's crumbling auto industry asks Congress for a bailout, Chrysler is in the awkward position of paying about $30 million in retention bonuses to keep top executives while the company cuts thousands of jobs.

Chrysler owes the bonuses under its contracts with about 50 executives, based on a retention incentive plan crafted early last year by former German parent DaimlerChrysler, when it was preparing to sell the Chrysler unit.

Nancy Rae, Chrysler executive vice president for human resources and communications, said the move made sense at the time to ensure potential buyers that key Chrysler executives would remain in place after a sale. She acknowledged that the bonuses could be seen as controversial now.

"We all would be smarter if we knew what we know now back in February of '07," she said. "Probably a lot of different decisions would be made."

Chief executives of Chrysler LLC, General Motors Corp. and Ford Motor Co. are expected to testify next week before a House committee on a proposal for $25 billion in low-cost government loans to help keep the companies afloat. Any aid is expected to come with limits on executive pay and bonuses. It is unclear whether those conditions would affect existing bonus plans -- Chrysler's was hatched around April 2007 -- or merely limit future bonuses and golden parachutes.

Retention bonus plans are fairly common in volatile times and at troubled companies that are straining to attract and retain top talent.

But they have been controversial in recent automotive industry bankruptcy cases involving suppliers Delphi Corp. of Troy and Toledo-based Dana Holding Corp. A 2005 change in U.S. bankruptcy laws forbade the payment of retention bonuses to executives just for staying at a company while it's in bankruptcy proceedings.

Documents obtained by the Free Press show that at least six Chrysler executives are due to receive bonuses of more than $1 million apiece to stay through August 2009, the two-year anniversary mark of when private equity firm Cerberus Capital Management bought an 80.1% stake in Chrysler.

The bonus sizes ranged from a high of Ewasyshyn's $1.89 million down to $200,000. The agreements provided for payments of 25% of the bonuses in February 2008 -- which were made on schedule -- and for the remaining 75% to be paid in August 2009.

Promise of a smooth transition

In an interview this week, Rae said Daimler considered it necessary to develop the plan because potential buyers wanted assurance of a smooth transition.

"These were very conservatively constructed," she said of the bonuses. "And keep in mind that it was Daimler doing it, Daimler selling the company and Daimler ensuring it was reasonable for a buyer. ... This was a Daimler program."

She added, "What was put in place at that time was very appropriate -- not only" as a "market practice but for the environment, the conditions of the company, the potential sale."

Peter Morici, a University of Maryland professor and former chief economist at the U.S. International Trade Commission, said he expects executive compensation to become a large issue during the debate over aid for the automakers. He questioned the need of retention bonuses for auto industry executives.

"Who are they going to work for?" he asked. "My feeling is they've run the companies into the ground."

John Challenger, a human resources expert with Challenger, Gray & Christmas in Chicago, acknowledged that such bonuses can be controversial but said companies see them as necessary to prevent loss of leadership during critical times.

"To get good people, the right people, then you often have to pay retention bonuses -- otherwise they just won't come or they won't stay," he said.

Rae said the Chrysler plan has succeeded in keeping talent in place.

"It's been very successful in these challenging times," Rae said.

With public support for helping auto companies weak, according to a Gallup poll, Congress has vowed to prevent big bonuses to executives as a condition of federal aid.

U.S. House Speaker Nancy Pelosi, D-Calif., said Congress will push next week to expand the nation's $700-billion bailout of the financial industry, called the Troubled Asset Relief Program, or TARP, to include automakers.

The auto companies would face limits on executive pay and bans on so-called golden parachutes, which enrich departing executives, said Pelosi and U.S. Rep. Sander Levin, D-Mich.

"We're very much interested in making sure there is shared effort and shared sacrifice," Levin told the Free Press.

Levin said lawmakers discussed those provisions at a meeting last week in Washington with automotive Chief Executive Officers Rick Wagoner of GM, Alan Mulally for Ford and Bob Nardelli of Chrysler, as well as UAW President Ron Gettelfinger.

"Everyone said they fully understood that," Levin said.

U.S. Sen. Chuck Grassley, R-Iowa, sent a letter Thursday to Wagoner, Mulally and Nardelli, urging them to trim executive compensation packages if they expect loan aid.

"They should take every step possible, including cutting executive salaries and bonuses, and exhaust all alternatives before coming to the taxpayers for tens of billions of dollars in help," Grassley said in a written statement.

Bailout regulations

The bailout legislation providing aid to troubled financial institutions requires that companies "meet appropriate standards for executive compensation and corporate governance." The rules prohibit new employment contracts with golden parachutes for executives of companies in which the Treasury takes an ownership position, but the language does not specifically address a retention bonus plan such as Chrysler's, in place before any federal aid is requested.

So far, the government has provided aid only to publicly owned companies. If federal aid is granted to Chrysler, a private company, questions will likely arise over how much internal information Chrysler would be required to disclose.

Rae said Chrysler stands ready to answer Congress' questions.

"We are very prepared to be transparent with the government," Rae said. "From what we understand, we're prepared to meet the same limitations that have been imposed on the other financial institutions that have been successful in receiving government money."

Labor unions have protested that company executives should not be unduly enriched when they are laying off workers and cutting the pay and benefits of lower-ranking employees.

The UAW could not be reached for comment Thursday.

Delphi, which has been in Chapter 11 bankruptcy since 2005, has drawn fire from labor officials for executive bonus plans that were approved by the bankruptcy court. Union leaders claimed, unsuccessfully, that they were tantamount to retention plans because they had easily reachable performance goals.

Since Daimler first announced in February 2007 that it was considering the sale of Chrysler, it has been a difficult stretch for the Auburn Hills automaker. Chrysler's U.S. sales this year have dropped further than any Detroit competitor -- down 26% through October.

Since February 2007, the automaker has announced the elimination of 34,000 jobs, including salaried, hourly and contract positions.

Program aims to find new jobs

BY TIM HIGGINS • FREE PRESS BUSINESS WRITER • November 14, 2008

Chrysler LLC with the State of Michigan and Oakland County on Thursday announced a plan to offer job-placement assistance to employees leaving the Auburn Hills automaker as part of the 25% white-collar reduction announced last month.

The program is to offer a range of services tailored to Chrysler employees who take voluntary separation offers or who get laid off.

"These are very challenging times in our country and industry, and the economic fallout has been even greater in Michigan," said Nancy Rae, Chrysler executive vice president of human resources and communications. "We are pleased that the state and county will offer outplacement and reemployment services to those employees leaving Chrysler."

The help is to be provided through nine Michigan Works! Career centers in Oakland County, with the Troy location providing overall leadership, Chrysler said.

Help is to include career counseling, workshops on résumé writing and entrepreneurial counseling.

"We want to help these displaced workers find new employment as quickly as possible. We want them working, and we want them working here. It's human capital that brings value to Oakland County. We all have a stake in this company and these people," Oakland County Executive L. Brooks Patterson said in a statement.

ProCharger adds 150 horsepower to the Challenger's 6.1L Hemi

As we found out at SEMA, performance parts are coming fast and furious for the Dodge Challenger. The Camaro may have been the official vehicle of the Las Vegas show, but the Challenger was the car of choice for many of the tuners in attendance. We were especially fond of the pair of Group 2 Widebody Challengers from Classic Design Concepts, one of which featured a ProCharger intercooled supercharger system. The blower wasn't unique to the car, however, and we found that ProCharger is offering two separate kits for Challenger owners, both of which boost horsepower by at least 150. Both feature ProCharger's P-1SC-1 centrifugal supercharger pushing 6 psi of boost, a 3-core air-to-air intercooler, upgraded fuel system and all necessary tubing and brackets. The Stage II kit pushes the bar further with a dedicated drive system for the supercharger and an upgrade air intake. You can check out full details on each system in the press release following the jump.

Accessible Technologies, Inc. / ProCharger announces the immediate availability of two, 100 percent complete intercooled supercharger systems and two tuner kits for the hot new Dodge Challengers equipped with the 6.1L HEMI® engine: the HO Intercooled System and Stage II Intercooled System; and HO Intercooled and Stage II Intercooled Tuner Kits. Both the ProCharger Systems and Tuner Kits can add 150 or more horsepower to the Challenger's potent 6.1L HEMI engine while still running high-quality pump gas.

Both the ProCharger HO and Stage II Systems utilize the proven and patented self-containedP-1SC-1 ProCharger supercharger, a 3-core air-to-air intercooler, OEM-quality mounting brackets and all necessary supercharger and intercooler tubes for installation onto the new Challengers. ProCharger systems for the 6.1L HEMI Challengers utilize Diablosport® flash tuning to apply the ProCharger-developed tune for both applications.

HO Intercooled SystemThe ProCharger HO Intercooled Supercharger System utilizes a "shared-drive" for the supercharger, and features the industry-leading self-contained ProCharger P-1SC-1 Supercharger, a large, 3-core air-to-air intercooler, upgraded fuel system and all necessary tubing and brackets. The 100 percent complete HO Intercooled system provides a standard 6 psi of intercooled boost when installed on otherwise stock SRT-8 Challengers.

Stage II Intercooled SystemUtilizing a proven and durable "dedicated-drive" system, the Stage II System also makes use of the proven and self-contained P-1SC-1 ProCharger Supercharger, while adding a unique, highly-efficient air intake and large, 3-core air-to-air intercooler and all necessary brackets and tubing. The Stage II Intercooled System provides outstanding power gains on both stock and modified engines with its standard 6 psi of intercooled boost and is best suited for future engine, fuel and exhaust system upgrades.

ProCharger Systems for the 2008 and newer HEMI Challengers feature easy installation, minimal relocation of components, no need to punch a hole in the oil pan, and avoids having to deal with the complexity and installation time and maintenance required for an air-to-water-to-air intercooler arrangement.

ProCharger 6.1L HEMI Tuner KitsIn addition to the two 100 percent complete systems, ProCharger also offers two intercooled Tuner Kits for the 6.1L HEMI Challengers – an HO Intercooled Tuner Kit and a Stage II Intercooled Tuner Kit. ProCharger Tuner Kits are essentially identical to the complete systems, but exclude fuel system upgrades and tuning. Both the HO and Stage II Tuner Kits are ideal for modified engines and are available with higher boost levels.

ProCharger HEMI AdvantagesWith reliability, quality and power far superior to other forced-air induction systems, ProCharger Systems and Tuner Kits are excellent ways to add even more power to these modern HEMI powerhouses. ProCharger supercharger systems for the EFI HEMI engines feature easy installation, minimal relocation of components, no need to punch a hole in the engine oil pan, and avoid having to deal with all the complexity and maintenance issues of an air-to-water-to-air intercooler configuration.

ProCharger-equipped Challenger owners will enjoy outstanding, day-to-day driveability, and consistent, reliable power gains while still running high-quality pump gas. And thanks to the industry's coolest charge air temperatures and largest power gains, no other supercharger system for the awesome new Dodge Challenger even comes close.

Industry-exclusive features include a patented, self-contained supercharger with an available 3-year warranty and a 3-core, air-to-air intercooler with a standard 3-year warranty.

For more information about all ProCharger Supercharger Systems and Tuner Kits, call 913-338-2886 or visit www.procharger.com.

ProCharger HEMI R&DOver the past three years ProCharger has established itself as the leader in Dodge/Chrysler HEMI forced induction systems. When Dodge introduced the modern EFI HEMI engines, the engineers at ProCharger knew they would be faced with some tuning challenges on this new platform. Thus began a grueling, 18+ month ProCharger HEMI R&D program that consisted of more than 200 ProCharged-HEMI engine dyno sessions, followed by another 200+ chassis dyno sessions with ProCharged HEMI-powered Chargers and Ram trucks. As a result, ProCharger is widely recognized as the industry-leader when it comes to powerful, reliable and proven intercooled supercharger solutions for today's HEMI-equipped vehicles.

"We dubbed this vehicle the ‘Contractor Special’ because it is perfect for construction site work,” said Bernard I. Robertson, Senior Vice President Engineering Technologies and General Manager for Truck Operations at DaimlerChrysler. “But, we believe the vehicle will also appeal to campers and outdoor enthusiasts, to farmers who have to work on remote sites, and to homeowners who need to keep their households running in the case of a power failure”.

The Dodge Ram Hybrid Truck can be used onsite as a diesel-powered electricity generator. It can provide 110 / 220-volt AC power. This feature will not only be useful on construction sites, but anywhere else where a little extra electricity may be needed.

Doubling as a portable generator, the Ram Hybrid also offers double environmental benefits.

The Ram Hybrid is considered a mild hybrid using the heavy-duty 2500 / 3500 chassis powered by a Cummins 325 hp, 5.9-liter turbo-diesel engine with 600 lb-ft which is assisted by an integrated starter-alternator hybrid system to provide supplemental power. It can generate up to fifteen percent more fuel efficiency than its standard twin.

With these, DaimlerChrysler considers the Dodge Ram Hybrid Truck an overall picture of cleaner and greener vehicles for years to come.

2009 Ram ‘most wanted’ by Edmunds Inside Line

Hundreds of cars and trucks were tested, but in the end only six emerged the winners of the 2009 Edmunds’ Inside Line Editors’ Most Wanted Awards. These are the vehicles that the editors of Inside Line want the most—their personal favorites. The vehicles were judged in categories of speed, luxury, hauling, commuting and family. And the pickup truck that emerged a clear winner with the judges was the 2009 Dodge Ram. Here’s what they had to say about it:

“Pickups ride significantly better with weight in the bed than without. Virtually everyone who has driven a loaded pickup has observed this and accepted it as mantra. Yet this is not the case with the all-new 2009 Dodge Ram 1500. Instead, it just rides well all the time. Its newfangled (well, for pickups anyway) five-link coil-spring rear suspension for the solid rear axle in the 2009 Dodge Ram raises the bar for pickup versatility by providing a supple and refined ride no matter the terrain. Rough roads that send the solid rear axles of other trucks a-skitter don’t even faze the Ram, even when there’s no payload in the bed that would help keep the axle planted on the ground.

The Ram SLT’s interior is also a success. The front seats, steering wheel and optional extending pedals adjust to accommodate nearly any humanoid, and the four bins in the rear seating area are a neat touch. The rear seats flip up in one motion. The road noise that finds its way into the cabin is minimal, enhancing the Ram’s overriding impression of chassis refinement. Under the hood is a 390-hp 5.7-liter Dodge V8. With its 407 pound-feet of torque, the Ram reaches 60 mph in 7.6 seconds (7.2 seconds with 1 foot of rollout like on a drag strip) and does the quarter-mile in 15.6 seconds at 87.7 mph.

Silverado, pass your torch. Chevy’s pickup has been the touchstone of chassis composure among half-tons since it was introduced in 2007, but the 2009 Dodge Ram 1500 changes the pecking order. This is an impressive truck, one that bridges the divide between capability and comfort in a way that is sure to be the envy of other manufacturers.”

Production begins on Jeep® J8 vehicles in Egypt

Chrysler LLC and the Arab American Vehicles Company today officially announced the manufacturing launch of the Jeep® J8 multipurpose vehicle at the company’s Cairo, Egypt, assembly plant.

“We’re pleased to recognize this important milestone and the role of both Chrysler and the Arab Organization for Industrialization,” Hussein Mustafa Mohamed, Chairman, Arab American Vehicles Co., said. “The launch of the incredibly versatile Jeep J8 and the anticipated demand for its export is an economically significant event for Egypt.”

The Jeep J8 marks the Jeep brand’s return to commercial and military vehicle production with a thoroughly modern vehicle designed to meet the needs of both government agencies and nongovernment organizations.

Originally unveiled at the 2007 Defence Systems and Equipment International military trade show in London, the Jeep J8 is available as a two-door with an extended pickup bed for personnel or equipment transport, or as a four-door multipurpose vehicle. It will be produced with numerous vehicle-body and seating configurations in either right- or left-hand drive. The two-door version, for example, can be configured as a personnel carrier with seating for up to eight.

“The Jeep J8 combines legendary capabilities and dependability that makes the Jeep Wrangler and Wrangler Unlimited famous, with unmatched cargo capacity and an exceptional towing rating,” Thomas Hausch, Chrysler LLC Vice President—Europe, Middle East and Africa, said. “The Jeep J8 is also an exceptional value, priced below other vehicles designed for humanitarian and military work.”

Hausch noted that Jeep vehicles debuted in 1941 as the workhorse of the military. With a 67-year reputation for off-road capability and utility in both civilian and military applications, Jeep vehicles are a benchmark, Hausch said.

With the 2008 Jeep Wrangler Unlimited as a starting point, Jeep engineers increased the vehicle’s capability and versatility. The frame of the Wrangler Unlimited is reinforced for increased ruggedness and to allow payloads up to a maximum of 2,952 pounds. Axles, brakes and suspension components are engineered specifically for more demanding military and civilian government use, including using a leaf-spring suspension in the rear. The J8’s Command-Trac® four-wheel-drive system allows maximum versatility and performance in both on-and off-road conditions.

The Jeep J8 is powered by a 2.8-liter four-cylinder turbodiesel engine that produces 158 horsepower and 295 lb.-ft. of torque, providing towing capability of up to 7,716 pounds. The engine is mated to a five-speed automatic transmission. The J8 also features a unique air-intake system with special filtration and a hood-mounted snorkel that enables the J8 to ford water up to 30-inch deep and operate in sandstorm conditions for up to five hours.

While not designed for front-line combat operations, the Jeep J8 is fully armor capable and excels in a variety of duties ranging from command vehicle to troop/cargo carrier, ambulance, communications vehicle and other duties—also making it suitable for civilian government applications. Tow eyes and heavy-duty bumpers allow the Jeep J8 to be easily transported by airplane or helicopter.

Arab American Vehicles Co. is a manufacturing joint venture between the Arab Organization for Industrialization (51 percent ownership) and Chrysler LLC (49 percent ownership). The plant, a 1.29 million square foot facility located on the outskirts of Cairo, was established in 1977 and produced its first vehicle in 1978 (Jeep CJ-6). A work force of 680 builds 17,600 vehicles annually.

Initially Arab American Vehicles was established to serve the Egyptian and Arab military forces by providing them with the American CJ-series Jeep vehicles, the descendants of the world’s first four-wheel drive military vehicle—the Willys. After meticulous testing, the armed forces of several Arab countries chose the CJ over other vehicles.

Arab American Vehicles also builds the Jeep Cherokee (Liberty in the United States) for retail sale in the region.

Backseat DVD systems offered at no extra charge

Thanksgiving is just a few weeks away, followed quickly by the holiday season, and families will soon be spending quality time with loved ones.

Quality time – like when you’re hitting the road for a 10-hour trip to Grandma’s, the kids are in the backseat pestering “are we there yet” mile after mile, the traffic ahead slows to a crawl and the snow falls heavier and heavier. Yep, quality time.

Just in time for the holiday season, Chrysler is offering at no charge a backseat DVD system when U.S. consumers purchase or lease a 2008 or 2009 Chrysler Town & Country minivan, Jeep Commander, Jeep Grand Cherokee or Dodge Grand Caravan. True backseat video buffs might like the 2009 models with the 9-inch DVD screens, which replace the 8-inch screens in the 2008 vehicles.

The program also includes the dual second and third row DVD in the Town & Country and Grand Caravan – a minivan exclusive - which at no charge is a total savings of up to $1,525 off MSRP.

The no-charge DVD system will run until Jan. 2, 2009. Financing is available for qualified consumers looking to lease or purchase, including zero percent financing on the 2008 model year Jeep Grand Cherokee, Jeep Commander, Chrysler 300C and the Dodge Dakota.

11.13.1893Charles Tell Lawson of American Motors is born in White Stone, VA
11.13.1909Automotive historian Albert Robert Bochroch is born in Philadelphia, PA
11.13.1928Capt. George White of the Army Air Corps stages the first Untied States test of rocket-powered vehicles at the Velodrome in New York City, but his unmanned motorcycle reaches just 17 mph
11.13.1945Racer Masahiro Hasemi is born in Tokyo, Japan
11.13.1956Robert W. Lea of the Stephens Motor Car Company dies at age 70

Obama urges Bush to offer immediate aid to ailing Detroit 3CHICAGO (Reuters) -- U.S. President-elect Barack Obama urged President George W. Bush to pass a second stimulus package to help the U.S. economy and asked him to use existing bailout measures to help the ailing auto industry, an aide said on Tuesday.

A spokeswoman for Obama said the president-elect raised the issue in his meeting with Bush at the White House on Monday.

Spokesman ... story Published: November 11, 2008 15:00 European Central time [REG]